Juergen Pieper, analyst at Deutsche Morgan Grenfell, also contributed to the BA discomfort. He moved his recommendation from overweight to neutral. The recent three-day strike, which he estimates cost pounds 30m, is not a big factor in his change of stance. He is much more concerned about the pound.

Today BA is due to meet union representatives to hear their proposals over its cost-cutting plans.

After a three-day retreat blue chips staged a modest rally with Footsie gaining 41 points to 4,846.7. A firm New York display helped.

SmithKline Beecham, on its share split rather than second-quarter figures, was the best-performing Footsie share, up 49p to 1,219.5p.

There was yet another twist to the Grand Metropolitan, Guinness, LVMH imbroglio. In a package deal the French group, through BZW, offered to buy three Grandmet shares at 630p and sell two Guinness at 600p. It is thought to have lifted its Grandmet stake to 8 per cent. Grandmet moved between 630p and 590p, closing at 622p, up 16p; Guinness swung from 698p to 584.75p, closing at 598p, down 9.5p. Cable & Wireless was buoyed 14p to 613.5p by Panmure Gordon support and Booker, up 17.5p to 264.5p, was helped by positive noises from UBS.

Banks attracted further support. HSBC said Barclays was worth 1,400p a share, lifting the price 37p 1,276p; Lloyds TSB improved 13.5p to 672.5p on HSBC's suggested 775p level. But Commercial Union, buying a French insurer for pounds 126m, fell 19p to 675.5p, after a bright start.

Its existing French involvement caused some of the damage with the market fretting about the impact of the higher French corporation tax. Kingfisher, with its Darty off-shoot, was another casualty of the tax increase, off 13p to 712.5p.

BZW was positive on utilities, pushing National Power 12.5p higher to 560p and Severn Trent 19p to 879p. United Utilities recovered just 2p to 701.5p following the 69.5p slump on Brian Staples' departure.

Billiton, the resources group, arrived in its when-issued form; the shares touched 228.5p from a 220p issue price.

Granada hardened 6.5p to 762.5p. The activity of Mercury Asset Management is intriguing. A year ago it held a 13 per cent stake. In drips and drabs its holding was cut to less than 7.5 per cent. Now it seems MAMs has re- established its feeling for the leisure group and picked up shares at 757p and 762p, lifting its interest to 7.54 per cent.

Reed International put on 14p to 614.5p on vague talk of corporate activity. Reuters, interim figures today, has been linked with the publisher. Up 17p to 609.5p, it is expected to produce little-changed figures of around pounds 340m.

Courtaulds, the chemical group, fell 9.5p to 298p after suffering a setback in its long-running battle with Lenzing, the Austrian group over the development of a rival to the Tencel fabric. There is talk of a compromise deal.

British Borneo Petroleum Syndicate, involved in a cash call, softened 40p to 1,257.5p with the nil-paid rights tumbling 36p to 62.5p.

Clothing maker Shani fell 27p to 68p on disappointing trading and Vision, making miniature electronic cameras, gave up 42p to 139p after warning losses would hit pounds 1m.

Hydro International, a water treatment group, sank 6p to 22.5p; the shares were 35p in May.

Taking Stock

Save, the petrol retailer which used to be known as the Frost Group, felt compelled to issue a reassuring trading statement after its shares had crashed to a 52.5p low.

It said that first-half profits, due next month, will be marginally ahead. Merrill Lynch, which recently said sell, is looking for little-changed year's profits of pounds 10m with pounds 11.9m pencilled in for next year.

On the Save statement, which said the company could not explain the share fall, the price rallied to close 1.5p higher at 59.5p. Two years ago the shares were 269.5p.

Total System, a computer group, rose 11p to 62.5p after MMT Computing lifted its shareholding to 5.62 per cent. A bid from the much bigger MMT is likely.